Author: Neil Humphrey

The Digital Chamber proudly congratulates Congressman French Hill on his appointment as Chairman of the House Financial Services Committee for the 119th Congress. 

Chairman-elect Hill’s leadership and vision have been pivotal in shaping the future of digital assets and financial services. As the author of the Financial Innovation and Technology for the 21st Century Act (FIT21)—a historic, bipartisan achievement—he has demonstrated mastery of complex financial policy and the ability to forge consensus on critical issues. Further, Chairman-elect Hill has been a relentless advocate for fair banking access, fighting to end discriminatory practices that exclude lawful digital asset businesses from essential financial services. As the current chairman of the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, as the former Republican lead on the Committee’s FinTech Task Force, and as an engaged member of the Congressional Blockchain Caucus, Chairman-elect Hill’s leadership and track record on digital assets policy is nothing short of exemplary. 

We look forward to continuing our collaboration with Chairman-elect Hill as he leads the Committee toward policies that secure America’s leadership in blockchain and digital assets. His commitment, expertise, and proven results are exactly what this transformative era in financial services demands. 

if you have any questions, please reach out to Policy@digitalchamber.org

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The Problem: 

U.S. critical infrastructure—like transportation, communication, health, water, and energy—is the backbone of the country’s economy. Yet, it remains increasingly vulnerable to cybersecurity disruptions from adversaries. 

Furthermore, FBI Director Christopher Wray warned earlier this year that “China’s hackers are targeting American civilian critical infrastructure, pre-positioning to cause real-world harm to American citizens and communities in the event of conflict.”¹ China is only one of several nation-states undermining U.S. cyber defenses, but Chinese advanced persistent threats (APTs) consistently rank among the most capable and intrusive. In December 2023, U.S. investigators discovered that hackers known as Volt Typhoon, affiliated with the Chinese People’s Liberation Army, had launched cyberattacks against government offices and infrastructure. These attacks aimed to gather intelligence, monitor citizens, and prepare to disable or degrade systems’ performance in future operations targeting the U.S. and its partners. Evidence suggests these APTs may have been active within U.S. networks since 2019. 

Most recently, hackers breached the networks of the largest water utility company in the U.S. that provides drinking and wastewater services to more than 14 million people in 14 states and 18 military installations.² One can only imagine how our adversaries could exacerbate national emergencies and disasters by degrading these critical systems in times of greatest need and vulnerability. 

The Solution: 

Blockchain technology can help mitigate some of these risks; they are inherently secure, and offer several key advantages that can bolster American cybersecurity capabilities: 

• Decentralization – Unlike traditionally centralized databases, blockchains operate on a distributed network of nodes. This decentralized architecture eliminates single points of failure, making it significantly more challenging for attackers to disrupt or compromise the entire network. 
• Immutable Ledgers – Blockchain employs cryptographic hash functions to secure transactions. Each block in the chain contains a hash of the previous block, creating a cryptographic linkage that ensures immutability. This property ensures a permanent, auditable record that is highly resistant to tampering. This is especially important in cybersecurity, where edges and nodes in a network can hold and communicate threat profiles and defensive resources more efficiently than regular, distributed updates pushed out by centralized entities.
• Enhanced Transparency and Trust – A blockchain is a distributed, shared ledger where all participants can observe and verify transactions, fostering trust and facilitating identification and mitigation of anomalies or fraudulent activity. 
   

What is to be done? 

U.S. allies and adversaries have either developed or are currently developing robust and progressive national blockchain strategies to leverage the high security, high fidelity, and low latency the technology offers. The U.S. government has consistently acknowledged the importance of blockchain technology and the need for policy development to support its secure deployment. For instance, the National Institute of Standards and Technology (NIST) Cybersecurity Framework highlights the importance of incorporating blockchain into cybersecurity strategies.³ Additionally, Executive Order 14028, Improving the Nation’s Cybersecurity, underscores the need for enhanced cybersecurity measures and encourages the exploration of blockchain technologies to strengthen the nation’s cybersecurity posture. 

However, many U.S. policymakers have ignored the seriousness of the threat posed in cyberspace and the possibilities of blockchain to mitigate those threats.  

The Digital Chamber (TDC) recommends that the U.S. government engage the blockchain industry and support its holistic development via an increase in strategic investment and research through agencies like the National Science Foundation, In-Q-Tel, Defense Advanced Research Projects Agency (DARPA), NIST, the Department of Homeland Security, the Department of Defense, and others. 

It is vital for U.S. national security interests to lead in advanced computing and blockchain innovation, to ensure networks are safe, information remains secure, and the U.S. can respond effectively to emerging threats. 

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If you have any questions, please reach out to Policy@digitalchamber.org.

The Digital Chamber is excited to announce its strategic partnership with Stablecoin Standard, an organization renowned for its international leadership in promoting transparency, stability, and innovation in the stablecoin ecosystem.  This partnership promotes joint efforts to shape a robust regulatory framework for stablecoins and enhance their adoption across global financial systems. 

The partnership between The Digital Chamber and Stablecoin Standard will focus on several key areas: 

• Amplifying the Stablecoin Standard’s best practices and frameworks for stablecoin issuance and management. 
• Engaging with policymakers in the U.S. and abroad to create a balanced regulatory environment. 
• Educating global stakeholders on the benefits and risks associated with stablecoin use. 

Cody Carbone, President of The Digital Chamber, expressed his enthusiasm about the collaboration: 

“Stablecoins are inherently global, and to drive worldwide adoption of payment stablecoins, we need partners with a deep understanding of international markets. Stablecoin Standard’s proven excellence in navigating complex regulatory landscapes abroad is an invaluable asset. Together, we can ensure that USD-backed stablecoins thrive not just in the U.S. but across global financial systems, bringing stability and efficiency to cross-border transactions.” 

Stablecoin Standard’s leadership also highlighted the importance of this partnership in driving forward-thinking solutions for the stablecoin industry. 

“Stablecoin Standard is thrilled to announce this partnership as we advance our mission to promote responsible innovation. Our collaboration with the Digital Chamber, including active participation in the Stablecoin Working Group, marks a strategic step toward building a resilient and transparent global stablecoin market.” – Beth Haddock, Global Policy Lead for Stablecoin Standard. 

This collaboration underscores The Digital Chamber’s commitment to advancing blockchain technology and digital asset innovation, providing a platform for dialogue between the private sector and regulators.   

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What are Deepfakes?  

Deepfakes are AI-generated synthetic videos and audio that convincingly mimic human speech and movement, often impersonating real people in scenarios that never occurred. These AI-powered tools are the latest and most dangerous threat in the ongoing battle against disinformation. 

How Are They Being Used?  

• Disinformation and Electoral Influence: Deepfake technology surged as a disinformation tool in 2024, with at least 133 documented campaigns impacting more than 30% of the 60 countries that held elections in 2024. Thirty-seven percent (37%) of these disinformation campaigns focused on U.S. elections, with actors linked to China, Iran, Russia, and North Korea weaponizing deepfakes to polarize and misinform voters.¹ 

• Cybercrime and Corporate Fraud: Criminals are increasingly using deepfake technology to impersonate senior executives and infiltrate corporate systems. A common threat involves fraudsters mimicking an executive’s voice to authorize a fraudulent wire transfer or access sensitive data, exemplifying the risks of corporate theft, IP compromise, and economic harm.² 

• Weaponized Harassment and Exploitation: Deepfake pornography made up 98% of all deepfake videos online in 2023, often targeting women, activists, or dissidents.³ Victims of these crimes face devastating personal and professional consequences, with such harassment increasingly used to silence critics of authoritarian regimes.⁴ 

Blockchain Solutions and the Immutable Watermark 

Blockchain technology offers a compelling solution to combat the challenges posed by deepfakes by leveraging its unique attributes of immutability, transparency, and decentralized recordkeeping. By securely storing and publicizing image provenance metadata – data about where and how an image was captured or created – analysts can verify the origin and history of media, ensuring it remains unaltered. This makes it nearly impossible for bad actors to tamper with or falsify content undetected.  

Blockchains enable verification nodes to maintain the fidelity of media content, using economic incentives to ensure honest participation. For example, in proof-of-stake blockchains like Ethereum, validators risk losing a portion of their staked cryptocurrency through slashing mechanisms if they submit false data or act maliciously, thereby upholding the integrity of the system. 

Furthermore, Zero-knowledge proofs (ZKPs) strengthen blockchain’s ability to verify media by confirming authenticity without revealing sensitive information. ZKPs work by comparing small pieces of encrypted evidence between users and verifiers, preserving privacy while ensuring accuracy. Once the small pieces of encrypted evidence are compared, the system verifies whether the media matches its original, unaltered state. 

In contrast, legacy solutions like metadata watermarking and the Coalition for Content Provenance and Authenticity’s (C2PA) standard to identify AI-manipulated media face limitations.  These methods do not incorporate the immutability, auditability, or economic incentive mechanisms of blockchains.  Specifically, C2PA watermarks are often lost when files are reformatted – such as when they are converted from JPEG to PNG. Additionally, legacy detection methods rely on AI models to be pre-programmed to an unknowable standard. C2PA audit trails are hosted by centralized entities like Adobe, Microsoft, and Google – all of whom have suffered recent data breaches. Blockchain-based deepfake detection stands out as the most effective approach to mitigate the risks of deepfakes, addressing critical issues like AI-enabled harassment, corporate theft, and political disinformation. 

Who we are: 

The Digital Chamber (TDC) advocates for national and international standards that leverage blockchain’s inherent strengths that can mitigate AI’s greatest risks.  

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 The Digital Chamber (TDC) has issued a detailed response to the letter sent by Representatives Casten, Lynch, Foster, Sherman, Scott, Cleaver, and Beatty to Secretary Yellen and Acting Under Secretary Smith regarding the potential risks posed by cryptocurrency mixers. 

In our response, we emphasize the need to contextualize the role of mixers within the broader financial ecosystem. While we acknowledge the challenges posed by bad actors, we also highlight the legitimate privacy benefits these technologies offer to activists, refugees, and others seeking financial security in oppressive environments. 

Our response underscores how privacy-preserving tools like mixers can coexist with robust compliance measures, such as those outlined in FinCEN’s guidance, to balance security and innovation. By leveraging existing regulatory frameworks, advancing education, and fostering partnerships between industry and law enforcement, we can ensure privacy-preserving technologies are used responsibly. 

We remain committed to supporting policies that enhance security without stifling innovation. Together, policymakers and industry leaders can create a balanced framework that prevents illicit activity while fostering a secure and inclusive digital asset ecosystem. 

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What is it  

Budget reconciliation is a legislative process established by the Congressional Budget Act of 1974, allowing Congress to adjust federal spending, revenue, and debt limits in a streamlined manner. Budget reconciliation allows legislation impacting debt, spending, or revenue to pass the Senate with a simple majority, bypassing the 60-vote filibuster threshold.   

This tool is typically used when one party controls the presidency and Congress but lacks a filibuster-proof majority.  The Congressional Budget Act of 1974 permits reconciliation to be used up to three times a year.   

Process  

The process begins when the House and Senate agree on a budget resolution, which is usually drafted by the Budget Committees in each chamber. This budget resolution includes “reconciliation directives” for specific (authorizing) committees, instructing them to craft legislation that achieves targeted fiscal outcomes, such as reducing or increasing spending or revenue by a set amount within a designated timeframe. Each designated committee then creates legislation to meet these fiscal targets and has flexibility on how to achieve these goals.    

Example: House and Senate Republicans pass a budget resolution that sets a fiscal goal of cutting $100 million over the next decade. The ‘reconciliation directives’ direct the Senate Finance Committee to craft legislation that cuts $50 million and the Senate Energy Committee to cut $50 million.   

Once the committees meet the directives, each committee’s bill package—usually comprised of multiple, separate high-priority bills—is then further combined into a single omnibus ‘reconciliation’ bill.   

The budget reconciliation process starts in the House, who send their reconciliation bill to the Senate. In the Senate, this bill is fast-tracked, with debate limited to 20 hours and a filibuster prohibited – although there may be amendments. The House Rules Committee, with its own mechanisms for limiting debate, usually adopts special rules for budget reconciliation, specifying debate time and permissible amendments.   

  

History  

Historically, budget reconciliation has been used sparingly, with just 22 instances since its inception in 1974. Since 2000, it has been used during periods of one-party control and taken the form of  tax cut measures under Presidents Bush and Trump, the Affordable Care Act under President Obama, and most recently to pass, the American Rescue Plan in 2021 under President Biden to expedite COVID-19 relief.  

In the 119th Congress, Republicans are likely to use budget reconciliation to advance tax cuts. With several of the 2017 Tax Cuts and Jobs Act (TCJA) personal tax provisions and exemptions expiring in 2025, all eyes will be on Congress to present a new tax package to President-elect Trump for his deliverance on campaign promises.   

With tax legislation, top of mind for most congress members entering 2025, expect crypto to be front and center in these conversations. Digital Asset stakeholders and advocates may capitalize on this opportunity to ensure much-needed clarity and reforms are made to current digital asset tax law. The Digital Chamber will continue advocating for the simplification of reporting requirements for digital assets transactions without infringing on privacy, while also promoting different tax reform legislation.  

If you have any questions, please reach out to Policy@digitalchamber.org

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TDC drafted a response to Senators Durbin, Blumenthal, Warren, Smith, Whitehouse, Welch, and Reed’s letter on perceived risks Bitcoin ATMs (BTMs) pose. The industry shares the Committee’s concerns about fraud prevention and consumer protection and our rejoinder highlights some of the proactive measures that the most responsible operators already employ that go above and beyond the regulatory frameworks that govern BTM operators at both the federal and state levels, emphasizing their commitment to combatting fraud through enhanced due diligence, real-time customer support, and collaboration with law enforcement.

TDC applauds government efforts to bring attention to this important issue and encourages ongoing collaboration to ensure that Bitcoin ATMs are a safe and secure part of the digital asset ecosystem. By working together, the industry and policymakers can continue to build a balanced framework that protects consumers while fostering innovation and access.

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The Digital Chamber Releases The Crypto Voter Bloc National Survey

October 17, 2024 – Washington, D.C.— The Digital Chamber has conducted a national survey highlighting how cryptocurrency policies are poised to play a pivotal role in influencing voter behavior in the 2024 U.S. elections. The survey’s findings shed light on the emerging “Crypto Voting Bloc” and demonstrate bipartisan support for prioritizing crypto regulation at the federal level.

Key findings include:

• 1 in 7 likely voters (16% or 26 million) identify as part of the Crypto Voting Bloc, indicating that cryptocurrency policy will significantly influence their vote in the 2024 elections. This group spans both Democrats and Republicans.
• Pro-crypto candidates may gain an edge at the polls, with 25% of Democrats and 21% of Republicans reporting that a candidate’s stance on crypto would positively impact their likelihood of voting for them.
• Both parties show strong support for prioritizing the crypto industry, with majorities of Democrats and Republicans agreeing that it should be a medium-to-high priority for Congress and the President.
• Public sentiment around crypto remains mixed, with 46% of respondents feeling neutral about the topic. However, those who are more familiar with cryptocurrency express the most positive views (29% positive vs. 25% negative).
• Familiarity with crypto correlates with increased trust in government regulation, as individuals with greater knowledge of the space show heightened confidence in officials to regulate blockchain and digital assets.

“The Crypto Voter Bloc National Survey is a wake-up call for policymakers: 1 in 7 likely voters now rank crypto as a deciding factor in the 2024 election,” said Perianne Boring, Founder and CEO of The Digital Chamber. “With tight margins expected across key races, this bipartisan Crypto Voting Bloc could tip the balance. Voters are sending a clear message—they want smart, balanced regulation that protects consumers without stifling innovation. Embracing a pro-crypto stance is a powerful opportunity for candidates to connect with this rapidly growing base.”

Conducted from September 12-17, 2024, in partnership with XandY Analytics, this national survey underscores the critical role that cryptocurrency will play in shaping the future of U.S. policy and governance. With bipartisan voter interest and a significant proportion of voters saying this issue will affect their vote, the results provide a glimpse into how digital assets will shape the upcoming election cycle.

To view The Crypto Voter Bloc National Survey results, visit: digitalchamber.org/vote. For more information and media inquiries, please contact the Digital Chamber at press@digitalchamber.org.

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About The Digital Chamber

The Digital Chamber is a non-profit trade organization committed to promoting blockchain adoption. We envision a fair and inclusive digital and financial ecosystem where everyone has the opportunity to participate. Access to digital assets is not merely a technological advancement but a fundamental human right, crucial for economic and social empowerment. Through targeted education, advocacy, and strategic collaborations with government and industry stakeholders, we drive innovation and shape policies that create a favorable environment for the blockchain technology ecosystem.

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We applaud Senator Hagerty for his leadership in introducing the Senate version of the Clarity for Payment Stablecoins Act. With the stablecoin market now reaching a market capitalization of $173.35 billion[1], the absence of a clear regulatory framework has held back its full potential. The Clarity for Payment Stablecoins Act is a crucial step forward, providing the regulatory certainty that will allow USD-backed stablecoins to thrive in a safe, predictable environment –empowering both innovators and consumers.

“Stablecoin regulation is no longer just an option—it’s a necessity that’s been overdue for too long. Federal Reserve Chair Powell, Treasury Secretary Yellen, and Deputy Treasury Secretary Adeyemo, to name a few, have all repeatedly called for Congress to provide clear guidelines, and we’ve reached a point where the lack of action is holding back progress. Senator Hagerty’s bill builds on previous efforts and provides the regulatory clarity that the market has long been waiting for. It’s time to move forward, not with hesitation, but with the urgency that this moment demands. We simply cannot afford to let this slip any further,” said Cody Carbone, President of The Digital Chamber

While there are key differences between this proposal and the House companion legislation, led by House Financial Services Committee Chairman Patrick McHenry, both bills share a key strength: preserving the option for state regulation of stablecoin issuers. This flexibility is vital for fostering innovation without compromising regulatory consistency or consumer protection, providing issuers with the certainty they need to operate under federal or state regulation and ensuring that stablecoins can thrive within a robust regulatory framework.  

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The Digital Chamber

1667 K Street NW, Suite 640

Washington, DC 20006 

Recognizing the importance of furthering data privacy and user control in digital identity solutions, The Digital Chamber (TDC) has reviewed and submitted comments to the National Institute of Standards and Technology (NIST) during its recent public comment period for its updated publication on digital identity. This latest draft, Special Publication 800-63-4, is the most recent update to this document, which has increasingly addressed decentralized identity as a topic in this draft and the previous version of the guidelines. We applaud NIST’s inclusion of decentralized identity philosophies, including what is known in the digital assets space as account abstraction, zero-knowledge proofs, and trusted pseudonymous interactions.

What is the NIST Digital Identity Guidelines Publication?

NIST’s digital identity guidelines document serves as standards and requirements for federal agencies that leverage digital identity technologies. Federal agencies must legally follow these specifications for any digital identity systems they use, whether built in-house or purchased from a private sector provider. Since many federal agencies in fact purchase these solutions from the private sector, this publication serves as de facto product requirements for private sector identity providers.

Why does this matter to the digital assets space?

Since people are the end users of identity products and often move across borders, international standards bodies like the International Organization for Standardization (ISO) and the Worldwide Web Consortium (W3C) have aligned their standards closely with those of NIST, and vice versa. Web3 identity companies are increasingly building decentralized identity solutions that adhere to these shared specifications and actively contributing to discussions about future standards.  Concepts well known to the digital assets space have increasingly gained visibility and support in these standards bodies, and this publication from NIST is the latest example.

“We commend NIST for placing privacy, user consent, data minimization, and account abstraction—all concepts enthusiastically supported by the digital assets space—as requirements in this latest version of the Digital Identity Guidelines,” says Jonathan Rufrano, Policy Director at The Digital Chamber. “Having contributed comments to the previous version of this publication, it is inspiring to see the NIST digital identity team of experts increasingly include industry feedback and recognize the critical importance of preserving privacy and user control over their digital lives. We hope to see comments from TDC included in the final version of this publication.”

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